7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

Key changes in force from 6 April 2023

Several changes are coming into effect from 6 April 2023 which affect pensions. Key changes include:

  • increases to the annual allowance limits and the removal of the lifetime allowance charge, as announced in the Spring Budget. See our Alert for details, and
  • the exemption of certain “well designed” performance-based fees from the charge cap which applies to CDC schemes and default funds in DC schemes used for automatic enrolment. The Regulations bringing this exemption into force also introduce new disclosure requirements in relation to illiquid assets, which do not come into effect until later this year. See our Alert for more details of the charge cap exemption and the new disclosure requirements.

TPR publishes equality, diversity and inclusion (“EDI”) guidance for trustees and employers

Intended to help improve the EDI of pension scheme boards, TPR published EDI guidance for governing bodies (including trustees and scheme managers) and employers on 28 March 2023. The guidance includes:

  • “pointers for chairs”, who TPR sees as playing a key role in making boards more diverse and inclusive
  • a recommendation that schemes have an EDI policy, which should include the EDI aims of the governing body and an EDI training plan, and
  • advice for employers on EDI-related considerations when appointing a chair or professional trustees.

TPR has also added a section on inclusive communications to its communications guidance for DC schemes to help ensure schemes consider the diverse range of backgrounds, needs and vulnerabilities when communicating with members.

Government publishes outcome of state pension age review

On 30 March 2023, the Government published the outcome of its second review of state pension age, which is required by statute to be reviewed periodically. Having considered evidence including two independent reports, the Government concluded that the increase to the state pension age from 66 to 67 should go ahead as planned between 2026 and 2028. However, the decision about the timing of the increase to age 68, which is currently scheduled for 2044 to 2046, has been deferred and will be reconsidered at a further review within two years of the next Parliament.

PASA publishes new pensions dashboards guidance

PASA published two new pieces of pensions dashboards guidance on 29 March 2023:

  • the “What to say to savers” guidance is intended to help administrators and pension providers respond to increasing numbers of enquiries from members about dashboards by providing suggested responses to common questions, and
  • an addendum to PASA’s August 2022 data matching guidance contains additional guidance on matching without a national insurance number, and responding to possible matches where the matching criteria are only partially met. Further advice on matching in “split administration” scenarios will be published as part of upcoming values guidance, and a further update on the impact of whether personal identifiers are verified or self-asserted will follow later this year.

PASA publishes guidance on creating an eAdmin engagement strategy

On 31 March 2023, PASA published guidance which aims to support schemes in developing a modern member engagement strategy, as part of a “successful digital programme”. It considers six areas to address, giving examples of the minimum expected standard, with practical suggestions on how to improve to an “optimum level”. The areas include creating an “emotional connection”, being inclusive and accessible, and staying relevant and current.

Government publishes updated green finance strategy

On 31 March 2023, the Government published a 2023 Green Finance Strategy. As part of the pensions-related measures in the strategy, the Government will “engage with interested stakeholders” during 2023 on clarifying trustees’ fiduciary duties in the context of the net zero transition, and will provide “further information and clarity” on these duties by reviewing the DWP’s Stewardship Guidance in late 2023. The FRC, working with the FCA, the Government and TPR, will review the regulatory framework for effective stewardship, including the Stewardship Code, in the last quarter of 2023.

Alongside the strategy, the Government published a consultation on whether ESG ratings providers should be brought into the FCA’s regulatory perimeter and how this could be done. The consultation closes on 30 June 2023.

PLSA publishes its annual stewardship and voting guidelines

The PLSA has published its latest annual Stewardship and Voting Guidelines, intended to provide a framework for trustees, and investors generally, to ensure that companies are held to account on key issues. Three themes are identified as particularly relevant for 2023:

  • the cost of living crisis
  • climate change and the environment, and
  • the impact of company operations on its workforce and the wider society.